STATE OF FLORIDA DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS, AND MOBILE HOMES IN RE: PETITION FOR ARBITRATION Belle Isle Apartment Corporation d/b/a Terrace Towers, Petitioner, v. Case Nos.: 2004-02-0386 2004-02-2097 Paul Bernstein and Alfred P. Gillio, III, Respondents. / FINAL ORDER Comes now, the undersigned arbitrator, and issues this final order as follows: On March 31, 2004, Belle Isle Apartment Corporation d/b/a Terrace Towers (petitioner/association) filed a petition for non-binding arbitration, naming Paul Bernstein and Alfred P. Gillio, III, as respondents/unit owners. The petition for arbitration was filed in response to a complaint for injunctive and declaratory relief filed by the respondents in the circuit court for Miami-Dade County, Florida. A hearing on the respondents motion for preliminary injunction was held on March 23, 2004. However, the court continued the hearing without ruling when the parties agreed to abate the court action to have the Division address the issues in arbitration. The association has alleged that the respondents are attempting to install air conditioning condenser units outside of their unit on the common areas of the cooperative, without approval and in violation of the association s documents. The 1
association further alleges that the respondents are storing cement blocks on the common areas and have placed a combination lock on a storage closet designated as association property. On April 5, 1004, the respondents filed an answer and counterclaim pertaining to the same disputed issues presented in the association s petition. The counterclaim is treated a new petition and the cases were consolidated on April 14, 2004. To avoid confusion, this order will refer to the petitioner as the association and the respondents as Mr. Bernstein and Mr. Gillio. In lieu of granting the respondents request for immediate preliminary injunctive relief, the arbitrator set the matter for a final hearing to be conducted on April 23, 2004. At this hearing, the association was represented by Helio De La Torre, Esquire, and David Farber, Esquire, and the respondents were represented by David A. Friedman, Esquire. ISSUES The first issue in this case is whether the respondents should be permitted to install two (2) air conditioning condenser units in an area designated as a common area of the cooperative. The association contends that the respondents are not permitted to install the condenser units in this area as it is a common area and cannot be converted for a resident s personal use. The respondents argue that the board approved the plans they submitted for renovations to their cooperative unit and such plans clearly reflected the installation of the condenser units in this particular area. As a result, the respondents claim the association is estopped from prohibiting the installation as the respondents relied on the board s approval and any alteration as 2
this time would be costly, time consuming and compromise the living conditions of their unit. The respondents also argue that the association has granted approval for the installation of air conditioning units on common elements for other residents. The association contends that the approval was only granted for the interior renovations to the unit and not for material changes to the common elements as the board lacks the authority to approve such changes without a 2/3 affirmative vote of the residents. The respondents have also raised a damage dispute alleging that a current board member, Irving Winston, removed copper supply lines to be installed with their air conditioning units and instructed the respondents contractor to remove additional lines resulting in damages in the amount of $750.00. The respondents have requested reimbursement for these damages. The issue involving the cement blocks that the respondents have stored on the cooperative common area will be disposed of by ruling on whether the respondents condenser units may be properly installed in the area in question, as the cement blocks are utilized with the installation of this equipment. The parties have also stipulated to the settlement of the issue regarding the storage closet. FACTS The parties called four (4) individuals to testify at the final hearing and relevant portions of such testimony are as follows: Yves Boucher has been the association s president since March 2004 and has been a board member for the past 3½ years. As the president, Mr. Boucher is 3
responsible for making decisions that affect the operation of the cooperative. According to Mr. Boucher, residents have never been authorized to take possession of a particular common area for their personal use, as the board does not have the authority to authorize such an action. The area in which the respondents intend to install air conditioning condenser units is located at the end of the pool deck and is considered a common area. Surrounding the pool deck, which overlooks the bay, are landscaped areas, lounge chairs, an awning and pool heater pumps. Personal property, such as an air conditioning condenser unit, is not permitted on the common areas. When respondent Bernstein requested to purchase an interest in the cooperative unit 3I, one condition of his purchase was to remove the existing air conditioning units from the storage area where they had been installed by the previous resident. Mr. Bernstein agreed to this condition and has complied with it. Mr. Boucher explained that before a resident is permitted to initiate remodeling or renovations to his or her unit, plans must be submitted to the association for approval. Mr. Boucher testified that the plans presented to him by Mr. Bernstein did not reflect the installation of air conditioning units outside the respondents unit on the common elements. Due to this omission, Mr. Boucher indicated that the plans would be approved. If the plans had indicated that the condenser units would be installed in the common areas, Mr. Boucher would not have expressed his approval as this would be contrary to the policy of the board. Mr. Boucher admitted that the cooperative s governing documents do not specifically address acceptable locations 4
for the installation of air conditioning units, however, other residents have installed air conditioning units on their balconies and this location would be approved for the respondents. 1 Mr. Boucher further testified that Mr. Bernstein is aware that condenser units may be installed on balconies as Mr. Bernstein previously resided in a different unit where the air conditioning unit had been installed on the balcony. Regarding the alleged damage caused by Mr. Winston, Mr. Boucher was informed of the incident, but did not witness it. In response to selective enforcement examples raised by the respondent, Mr. Boucher stated that the board is aware of four other residents that have installed air conditioning units in unauthorized locations, including the roof, and all such residents have been sent letters requiring the removal of the units. If the residents fail to comply with the board s request, the board will seek further legal actions to ensure compliance. Steve Gutierrez, currently employed as the property manager since March 2002, testified that it is the cooperative s policy to require residents to submit remodeling or renovation plans to the property manager for submittal to the board for approval or disapproval. In accordance with this policy, Mr. Bernstein submitted renovation plans for unit 3I to Mr. Gutierrez. Mr. Gutierrez reviewed the plans briefly and passed them onto Michael Tangeman, former board president. Mr. Gutierrez does not recall if the plans reflected that the air conditioning units would be installed 1 Based on photographs and evidence submitted, the cooperative building was constructed in the 1960 s and most of the units are equipped with antiquated and inefficient wall units. At some point it will be incumbent on the association to develop a rational and thoughtful policy on changing out the air conditioning units instead of approaching this issue on a piecemeal basis. See A. N. Inc. v. Seaplace Association, Inc., Arb. Case No. 98-4251, Summary Final Order (November 19, 1998), n.6. 5
on the cooperative s common area, but he did not observe any alterations to Mr. Bernstein s plans after submitting them to the board. Mr. Gutierrez was then 6
instructed by Mr. Tangeman to sign the plans as approved. However, Mr. Gutierrez had assumed the condensers would be installed on one of the unit s two balconies and he believed that Mr. Bernstein understood that air conditioning condenser units could not be installed on the common areas, such as the pool deck. The particular area in which Mr. Bernstein intends to install his condensers is currently utilized for landscaping, displaying a large tree in the middle of the area, which is directly below one of the balconies for Mr. Bernstein s unit. Mr. Gutierrez also testified that the board has consistently taken the position that air conditioning units are not permitted on the cooperative s common areas and such policy has been enforced. Mr. Gutierrez was also present at the incident involving Mr. Winston. He did not witness Mr. Winston remove or damage any equipment, however, he did observe Mr. Winston touch and wriggle some pipes, and he also witnessed him yelling at the respondents contractor to remove other pipes. Sandra Paul, elected to the board last year and serves as the current secretary, testified that Mr. Gutierrez requested her signature on a letter, dated April 15, 2003 and addressed to the City of Miami Beach Building Department, stating that the remodeling plans for unit 3I had been approved and the application process for building permits should proceeding accordingly. However, Ms. Paul did not write the letter and indicated that while she believed the contents of the letter to be accurate, she did not personally review Mr. Bernstein s plans or discuss the contents of the letter with any other board member prior to signing it. Ms. Paul testified that the board does not approve plans for modifications to the common areas. Ms. Paul also 7
indicated that Mr. Bernstein requested her assistance in dealing with Mr. Winston, although Ms. Paul did not witness the incident and could only testify that Mr. Winston informed her that he had put a stop to Mr. Bernstein s condenser installation. Paul Bernstein, respondent, has been a resident for approximately four years, first residing in unit 3F. He was also a board member from 1999 until 2002. He presently owns an interest in unit 3I, but is living elsewhere until his renovations are completed. Mr. Bernstein testified that the renovation plans he submitted to the board clearly reflected the location of the air conditioning condenser units. When he received the approved plans, he proceeded with his renovations, unaware that the board would object to the placement of the condenser units. Mr. Bernstein testified that he relied upon the board s approval of his renovation plans and changes at this stage would be costly and time consuming. Mr. Bernstein indicated he was under the impression that condensers were allowed on the common area rooftop and, therefore, would be allowed on the common area pool deck beneath his balcony. Mr. Bernstein also testified that when he was a board member, he requested the board s opinion on the installation of condenser units on the roof and the board indicated such a placement was permissible, however, a formal ruling was never issued. In the area in which Mr. Bernstein wishes to install his condensers, he stated that he has never observed a resident using that area for any purpose. Additionally, it would not be necessary to remove the existing tree from this area if Mr. Bernstein were permitted to install the condensers, which are about 30 square inches each. He has also offered to provide additional landscaping to this area in an effort to conceal the 8
condensers. In Mr. Bernstein s opinion, his condenser units would not offer any more noise to the pool area than the existing noise generated from the pool heaters. Mr. Bernstein further testified that the cooperative s governing documents fail to specifically indicate the proper location for the installation of air conditioning condensers. However, Mr. Bernstein admitted that he has not observed other condenser units installed in a location similar to where he wishes to install his units, that is, on the ground in the common areas. Regarding the incident with Mr. Winston, Mr. Bernstein was informed of the damage by his contractor and billed for the repair work, but he did not witness the event. CONCLUSIONS Pursuant to the Article 12 of the Belle Isle Apartment Occupancy Agreement, entitled Alterations and Additions, entered into between all residents and the cooperative: The member shall not, without the written consent of the Corporation, make any structural alterations in the premises or in the water, gas or steampipes, electrical conduits, plumbing or other fixtures connected therewith, or remove any additions, improvements, or fixtures from the premises. * * * The member shall not, without the prior written consent of the Corporation, install or use in his dwelling unit any air conditioning equipment, washing machine, clothes dryer, electric heater, or power tools. The Member agrees that the Corporation may require the prompt removal of any such equipment at any time, and that his failure to remove such equipment upon request shall constitute a default within the meaning of Article 13 of this agreement. 9
In compliance with article 12 of the cooperative s occupancy agreement, the respondents submitted renovation plans for their unit to Mr. Gutierrez. Credible testimony was presented which indicated that the plans submitted to Mr. Gutierrez reflected the placement of air conditioning condenser units outside the respondents unit and on the common areas. The board had the opportunity to review these plans and determined to approve the plans without noting any conditions on the installation of the condenser units. Upon receipt of the approved plans, the respondents reasonably relied on the board s approval and proceeded with the renovations as set forth in their plans. Considering that the respondents followed the proper policy by submitting renovation plans to the board and did not proceed with their renovations until their plans were approved, it would seem inequitable to disallow the respondents from continuing with renovations that were clearly approved by the association. To require the respondents to change their previously approved renovation plans at this time would not only cost the respondents considerable expense and time, it would establish a poor precedent whereby associations would be permitted to retract from a previously issued approval without consequence. A ruling of this nature would place residents in a precarious situation whereby the formal approval process would be rendered ineffective and unreliable. It would also send a message to the association that it is not necessary to review renovation plans carefully and thoroughly because upon the discovery that the plans should not have been granted, the approval can then be revoked without effect to the association. Rather, the message should place the association on notice that more attention and scrutiny should be devoted to 10
reviewing renovations plans submitted by residents so as to avoid this situation in the future. Notwithstanding the language above, it is clear that the respondents have requested to install air conditioning condenser units on the common areas of the cooperative property. While the respondents renovation plans indicated that the condenser units would not installed within the boundaries of their unit or on one of the balconies, the addition of specific details might have attracted the attention of the board and prevented the confusion. If the requested installation were allowed, it would result in the conversion of the cooperative property for the respondents own use and would prevent the association or other residents from utilizing that property. This action would also violate section 719.105(2), Florida Statutes, which provides the following: Each unit owner is entitled to the exclusive possession of his or her unit. The unit owner is entitled to use the common areas in accordance with the purpose for which they are intended, but no use may hinder or encroach upon the rights of other unit owners. The respondents would be using the common area for a purpose for which it was not intended and such a use would hinder or encroach upon the rights of other owners to occupy, use and enjoy the area. As such, the intended installation cannot be permitted, despite the association s approval, as it would clearly violate the Florida Statutes and the association does not have the authority to approve an action that violates the statutes. However, the association will be held accountable for failing to 11
review the respondents renovation plans with the appropriate amount of care and attention. Regarding the alleged damages caused by Mr. Winston, according to the contractor s billing statement, it is not clear whether all of charges are related to Mr. Winston s alleged actions. At least three of the entries reflect charges that were incurred to re-connect and re-insulate lines and for the installation of new refrigeration lines. While this indicates that the contractor may have repaired damaged equipment, the contractor should not have been given the approval to repair such equipment when it was clear that the board might have an objection to the intended installation. It would have been prudent for the respondents to contact the board when this incident took place to determine if it was wise to allow the contractor to repair the damaged equipment and incur additional charges. It is not clear if the remaining work entries directly relate to Mr. Winston s alleged actions or to other renovation work. Thus, the respondents will not be compensated for these charges. It is therefore ORDERED: The respondents are not permitted to install air conditioning condenser units on the cooperative s pool deck or other common areas. The respondents shall remove the cement blocks stored on the pool deck within ten (10) days hereof. The parties shall confer and decide upon a mutually agreeable location for the respondents condenser installation. If the parties cannot agree upon a location, the respondents may install the condenser units on one of their unit balconies. Furthermore, the association is ordered to reimburse the respondents for one-half of the documented costs associated with the re-location and re-installation of 12
the condenser units. The association is not responsible for previously incurred costs nor is the association required to reimburse the respondents for any other alleged damages. DONE AND ORDERED this 29 th day of April 2004, at Tallahassee, Leon County, Florida. Melissa Mnookin, Arbitrator Department of Business and Professional Regulation Arbitration Section Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-1029 Certificate of Service I hereby certify that a true and correct copy of the foregoing final order has been sent by U.S. Mail to the following persons on this 29 th day of April 2004: Helio De La Torre, Esq. Laura M. Manning, Esq. Siegfried, Rivera, Lerner, De La Torre & Sobel, P.A. 201 Alhambra Circle Suite 1102 Coral Gables, Florida 33134 Fax: (305) 443-3292 David A. Friedman, Esq. Fowler White Burnett, P.A. 100 Southeast Third Avenue Suite 100 Fort Lauderdale, Florida 33394 Fax: (954) 377-8101 13
Melissa Mnookin, Arbitrator Right to Appeal As provided by section 718.1255, F.S., a party which is adversely affected by this final order may appeal by filing a petition for trial de novo with a court of competent jurisdiction in the circuit in which the condominium is located, within 30 days of the entry and mailing of this final order. This order does not constitute final agency action and is not appealable to the district courts of appeal. Attorney s Fees As provided by section 718.1255, F.S., the prevailing party in this proceeding is entitled to have the other party pay its reasonable costs and attorney s fees. Rule 61B-45.048, F.A.C., requires that a party seeking an award of costs and attorney s fees must file a motion seeking the award not later than 45 days after rendition of this final order. The motion must be actually received by the Division within this 45-day period and must conform to the requirements of rule 61B-45.048, F.A.C. The filing of an appeal of this order does not toll the time for the filing of a motion seeking prevailing party costs and attorney s fees. 14